SIP meaning,benefits, steps, disadvantages, calculation,formula for creating money and conclusion

2. mutual fund
schemes
SIP
(systematic
investment plan)
SWP
( systematic
withdrawn plan)
STP
(systematic
transfer plan)

3. SIP( SYSTEMATIC INVESTMENT PLAN):
• A Systematic Investment Plan (SIP) is an
investment vehicle offered by mutual
funds to investors, allowing them to invest
small amounts periodically instead of lump
sums.
• The frequency of investment is usually
weekly, monthly or quarterly.
• SIPs are flexible, the investors may stop
investing a plan anytime or may choose to
increase or decrease the investment
amount.
• We can also do SIP in ELSS(Equity linked
saving scheme) to save the tax under
section 80 c.

4. FORMULA FOR CREATING MONEY:
START EARLY INVEST REGULARLY CREATE WEALTH

5. Benefits of Investing through SIP:
1. Rupee Cost Averaging:
2. Rupee cost averaging is an approach in which you invest a fixed amount of
money at regular intervals.
3. Most investors want to buy stocks when the prices are low and sell them
when prices are high.
4. A more successful investment strategy is to adopt the method called Rupee
Cost Averaging.
2. Regularity of Investments:
1. SIP removes human judgment from the decision making process.
2. It makes discipline in the investor and helps him stay focused, investing
regularly for the long term.

6. 3. Benefits of Compounding:
1. The key to building wealth is to start investing early and to keep
investing regularly.
2. A small amount of money invested regularly can grow to a large
sum.
3. This helps in creating a substantial amount of wealth which
includes your own contribution, plus returns compounded over
the years.
4. For example, the following graph demonstrates the effect of
returns on monthly investments of $1000 per month for a
period of 20 years.
CI=P(([1+r/100]^n)-1)
=1000((1+10/100)^20)-1)
=1000((1.1)^20)-1)
= 1000(8.12 -1)
=1000(7.12)
CI=7120

7. Disadvantages of SIP:
1. Averaged returns - if you strongly believe (and
have some data points) that the market will go
up in near future, investing lump sum would be
better than SIP, since SIP will average your cost.
2. Less control - In a way SIP is a rigid product. You
are investing a fixed amount in a fixed Mutual
Fund scheme. If you want to change the scheme
or the amount, you need to stop the first SIP and
start a fresh one.

8. Steps that you need to follow to start
your SIP are :
1. Set Your Finance Goals.
2. Measure Your Risk Appetite.
3. Plan Your Investment Horizon.
4. Invest Online/Offline.
5. Invest Directly/Through Financial
Advisors.
6. Application form.
7. KYC Compliance.
8. Decide Date and Amount of SIP.
9. Decide Mode of payment.
10.Select Fund Type.

9. Calculation
of SIP:

11. • Conclusion:
• While you can take any period as
payment for SIP, the funds offering the
SIP plan may differ. Today most of the
funds offer SIP as a way of investing.
• SIP is a great tool of common investors
who want to build wealth over longer
period. The market fluctuation and risk
are much better managed with SIP
than any other method.